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waging war on salary

Everything is rooted first in an idea. Seldom are things what they are–seriously, it is what it is is a phrase that needs to be obliterated outright–rather, they are anchored by presupposition, predicate events, definitions, etc.

The present is inextricably linked to the past. Nothing exists in a vacuum. (Come to think of it, isn’t that a brilliantly redundant sentence?)

With recent fiat regulatory changes to the nature of pay for exempt (read: salaried) work authorized by the erstwhile presidential administration, then stayed by a federal judge in Texas, the nature of exempt versus non-exempt work briefly became a point of conversation. In short, exempt workers earning less than $47,476 in salary were to be paid overtime as though they were non-exempt (read: wage-earning) workers.

The first glance take by many was, ‘Cool! MONEEZ!’ And that would make sense, since, hey, who doesn’t like more money? In a sustained economic climate of flat average wages and inflation, it could be seen as government throwing the gray collared class a bone.

A deeper look at the matter, though, showed the rule change for what it is: a bureaucratic and logistical nightmare for businesses and employees. Employees who were not adjusted to above-threshold pay levels would essentially lose their exempt status, the trade-off for more money being meticulously tracking time as though they were not salaried at all. Employers artificially bumped entire sectors of their business, creating a new, unintended impact to the bottom line, putting some employers in a position where they had to cut payroll to keep the books level.

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[Hmmm? Oh, I didn’t say anything. Sorry.]

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These kinds of wholesale changes are almost unilaterally nothing more than cynical pandering. Attempts to jack the minimum wage don’t just cause headaches for small business owners, but they push entire segments of the workforce closer to poverty as the other mechanisms are triggered within the economy adjust to the new baseline. Flat wages lend themselves to flat revenues; starve someone long enough and they’ll eat anything that looks like food. (Hey, they’ll get your vote, too.)

And this is what happens when we fundamentally misunderstand wage and salary. This is neither an economic nor math problem: arbitrarily rewriting numbers higher–even for the most well-intentioned (assuming noble motivation) reasons–does nothing productive when we don’t even comprehend what it is being changed.

Salary and wage are ideas. Salary is more or less an allowance: rooted in the Roman military tradition of paying salt-money in exchange for continued service. It is a forward-thinking payment that sets out to make above and beyond work worth a person’s while. Wage, on the other hand, is a reward for work already done. It is recompense for the past.

Salary, in essence, buys off a person’s commitment to a standard schedule where it is made worth a person’s while to not be confined to a shift. Wage, in contrast, is offered with clearer baseline expectations. (Anyone else ever work in an environment where overtime was discouraged, if not penalized?)

Neither are necessarily bad: some people prefer income stability, while others prefer the budgeted schedule and the chance at making a little more here and there. Some employers prefer people to not worry about the clock, others need to maintain a bottom line. It depends on the business and type of activities within it.

The problem is that workers and managers alike also seem to misunderstand this as much as, if not more than, government bureaucrats and the wage-hike cheerleaders. Salary is not designed to be abused and make people work 50-70 hour work weeks; that is an abuse of workforce and bad faith. Similarly abusive are environs where workers are either subjected to repressed wages or otherwise obligated to work overtime on a regular basis.

If anything, it amplifies fundamental misunderstandings and makes bad situations worse: a jerk of an entrepreneur who expected 80 hours of work per week from an exempt employee for $40,000 will expect that much more from someone when they have been required a nearly 20% raise by bureaucratic decree. That same jerk will either cut working hours or workforce entirely when wage obligations reach an unsustainable level. These are not merely math problems: they’re philosophical problems.

The part about Smith’s Wealth of Nations that people seem to overlook is that the name of the book has nothing to do with capital or capitalism. He’s pretty clear on this point, before laying out–in most comprehensive detail–his capitalist treatise: the wealth of nations is in the goodness of its people. The title is an irony. And, while I quickly veer away from the partisanship and rancor and cause all gradation of grundy such as whenever terms like ‘capitalism’ or ‘socialism’ are implied or invoked, the point I’m making is that if we understand what we’re dealing with, we stand a far better chance of actually solving problems, and doing so together. Further, I believe this is particularly true in matters of compensation.

A good and wise business owner will treat her employees with goodness and wisdom in all respects. Granted, this doesn’t happen much, but when the conditions are such that ownership is obligated to conform to a standard, the ability to demonstrate goodness or wisdom is also necessarily restricted.

So, then, this is how we ought to interpret broad-stroke regulatory changes like the one currently stayed: as a capricious restriction on our ability to be better. The bigger check makes for stronger chains. The law brings death, and that which is dead is connected to nothing at all.